In the next seven months Telstra will cough up 28cents dividend, that’s 40cents pre-tax. Over such a short time frame a valuation makes little sense as the voting machine will determine the price. However what this chart shows is that at the current price of $2.80 Telstra presents an excellent short term opportunity with an attractive risk/return profile.

2011 will be transformational for Telstra. I’m writing up my analysis now, but prior to publishing want to get a rough view of what people see happening with the share price this year. Is the 10% yield (14.4% grossed up) a value trap?

The lowest likely (-2SD) price for Telstra in 2011?
$2.60 (66%, 19 Votes)
$2.00 (17%, 5 Votes)
$2.40 (10%, 3 Votes)
$2.20 (7%, 2 Votes)
Total Voters: 29

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The Australian stock market historically returns around 13%, comprised of roughly 10% capital growth and 3% dividends. The current yield on Telstra inverts those returns, with over a 10% after tax dividend and 3% growth.

Telecommunications is a capital intensive business. Telstra are fighting increasing competition, increasing interest rates, decreasing returns on their defined benefits fund and an insane government at a time of generational change in their business. Projecting consistent earnings into the future for a company faced with so many issues is hazardous. However, Telstra do have a very strong brand and have invested heavily in their transformation project.

A picture is worth a thousand words.

or it would be if Google would let me annotate their charts with a few words. Yes Telstra’s ROE is still below 2000 levels, but it is in part because of those outrageously high returns on equity there are now so many players in the telco space. Plus we’ve had a major recession 2000-2002 and a massive transformation 2006-2009 over that time frame.
Let’s add some perspective to those numbers. The trend in ROE is up and is likely to continue up. Telstra is a capital intensive business, …

I sold our remaining two six last night, IIVI. Meanwhile I’ve been buying a couple small Australian value plays. The woeful liquidity and lack of communication are issues, but the simplicity of the business, super low valuations and increased possibility of finding multi-baggers are alluring. I’m currently writing an analysis on one of the companies.
I’ve been watching Telstra with interest. I recall telling a commenter, S, I’d post something soon and have been meaning too. I still like Telstra, though not enough to write an article saying I like Telstra. As you can see …

Australian companies traditionally pay high dividends due to tax laws which make dividends attractive to investors. The following seven companies yield between 3.3% and 8.8% on trailing dividends and 5-12% based on their previous high annual dividends.

I’m not sure I completely understand what the government has done and is trying to do with Telstra. To seek clarification, I’ve decided to pen my understanding.
The Australian Government sold investors the monopoly Australian telecom, Telstra. Which comprised the monopoly wholesale copper wire network and the then near monopoly business and retail telecommunications provider.
Since then the government has encouraged competition against the assets they sold and tried at every turn to limit the profitability Telstra would achieve in a free market.
Now, the Government has decided they once again want to own the …

Buying Telstra at current prices gives investors a relatively safe 10% yield while they wait for a respectable capital gain.

G’day mate. How they hangin’? Side by side for comfort or back to back for speed?

Here’s a quick update on some Aussie stocks I’ve had a gander at, including; Biota, Hunter Hall, Telsta and CSL.

Today I wanted to get down from my pulpit and dive into some actual research and analysis. I was planning on a comparison of three Australian telecommunication companies, Telstra (TLS.AX), iiNet (IIN.AX) and M2 Telecommunications (MTU.AX). However, “The China Bubble’s Coming — But Not the One You Think” by Vitaliy Katsenelson has delayed my decent into details.